"In the current economic environment, with many firms 'right-sizing' their workforces and outsourcing jobs, more and more self-employed and individual consumers are coming into the individual market.
"Moreover, because of state and federal mandates that apply to employer-sponsored coverage, many of our small business clients are beginning to look seriously at individual policies as a more affordable health coverage option for their employees. Within my own firm, my wife and I and one other employee own high-deductible plans in tandem with health savings accounts (HSAs); a second employee has a HIPAA-CHIP PPO policy with a $1,000 deductible; and the third, who has young children, has a PPO plan with relatively low office visit and prescription copayments. We have found that buying insurance through the individual market is saving our small group 40 to 50 percent in premiums, while at the same time giving each individual an opportunity to purchase coverage that makes the most sense for his/her specific situation, instead of the 'one-size-fits-all' aspect sometimes inherent in employer-provided coverage.
"The individual market offers more consumer-centric options like HSAs, and public policymakers and legislators should understand how attractive this is for previously uninsured individuals. Nationally, 43 percent of those applying for high-deductible/HSA arrangements in the individual market lacked health coverage at the time they applied. More than 40 percent of singles and 53 percent of families who purchased an HSA plan from a major online insurance provider in 2004 had household incomes of $50,000 or less.
"What is the major driving factor behind innovation in the individual market in many states? Clearly the key is competition. In states with reasonable market regulation, there is no lack of competing carriers. With competition, consumers benefit with respect to price, underwriting, and service."
Grace-Marie Turner, president of the Galen Institute, Alexandria, Virginia
"The AHIP study demonstrates that the market for individually purchased health insurance is healthier than is commonly believed. Millions of people are purchasing insurance that is comprehensive and affordable, and the great majority of those who apply for coverage get it."
"The individual market will become even more dynamic in the future as more and more people see the appeal of Health Savings Accounts and other consumer-directed products. The great need is for state legislatures to relax the regulations and mandates that keep prices artificially high in many states and that keep people from buying the coverage that best suits their needs."
John R. Graham, director of health care studies, Pacific Research Institute, San Francisco, California
"This research indicates that individual health insurance markets can function well. Unfortunately, policy in the U.S. has treated this market like an orphan, stranded between employer-sponsored and government-run health insurance.
Both federal and state governments need to change the rules to allow Americans greater choice in buying health insurance. Let a thousand flowers bloom!"
Devon M. Herrick, health economist and senior fellow of the National Center for Policy Analysis, Dallas, Texas
"According to recent surveys by the Kaiser Family Foundation, employer-sponsored health insurance cost an average of $9,950 per family. The AHIP study, by contrast, found that 98 percent of family policies purchased in the individual market were sold in states where policies had an average cost less than $6,000.
"This shows that Americans, when left to their own devices, shop for less expensive polices and get better deals on their own."
Editors and reporters: The executive summary and full text of the AHIP report are available for downloading through PolicyBot™, The Heartland Institute's online research database. Point your Web browser to http://www.heartland.org/article.cfm?artId=17692 for the two-page summary, and http://www.heartland.org/article.cfm?artId=17693 for the full report.
The following experts and analysts are available to comment on the report.
Mr. John P. Garven, CLU, RHU, president and founder, Benico Ltd., 847/669-4800; email firstname.lastname@example.org
Ms. Grace-Marie Turner, president, Galen Institute, 703/299-8900, email@example.com
Mr. John R. Graham, director of health care studies, Pacific Research Institute, 415/955-6104, firstname.lastname@example.org
Mr. Devon Herrick, senior fellow, National Center for Policy Analysis, 972/386-6272, email@example.com
The Heartland Institute is a national nonprofit organization based in Chicago. Founded in 1984, its goal is to help build social movements in support of ideas that empower people. Among other publications, Heartland publishes Health Care News, a monthly newspaper addressing health policy issues. Heartland is supported by approximately 1,500 donors and members. For more information, call Ralph Conner, Public Affairs Director, 312/377-4000, or email him at firstname.lastname@example.org.